The EU steel industry

The EU steel industry

The steel industry has long held a strategic place in the EU economy, fostering innovation, growth, and employment. To face the downturn of steel demand after the economic crisis and ensure a promising future for the sector, the European Commission is working on boosting the industry. Steel is closely linked to numerous industrial sectors such as automotive, construction, electronics and renewable industries.

Why the steel industry is important

Production - the EU is the second largest producer of steel in the world after China. Its output is over 177 million tonnes of steel a year, accounting for 11% of global output.

What the Commission does

Action plan - as a result of the ongoing economic crisis, steel demand remains 27% below pre-crisis levels and up to 40 000 jobs have been lost in recent years. To help the European steel industry confront these challenges and return to pre-crisis production levels, the Commission adopted an Action Plan on the competitiveness of the steel sector in 2013 and proposed the formal creation of a High-Level Group on Steel.

EU funds - various EU funds and policy instruments such as Horizon 2020, Structural Funds, and the Research Fund for Coal and Steel can be mobilised to alleviate social costs and to ensure that skills required for steel making are retained for the future competitiveness of the industry. To minimise the social impact, good practice in the field of training and requalification at company level should be promoted.

Challenges faced by EU’s steel industry:

The main challenges for the EU steel industry are linked to the cost and availability of raw materials and energy, environmental and climate change regulation, and competition from non-EU country producers. The main issues affecting the competitiveness of the EU steel industry were identified in the Steel Action Plan:

The right regulatory framework - EU legislation is essential for the sustainable development and proper functioning of the internal market, for investor certainty and predictability, and for providing a level playing field for the steel industry.

Boosting demand for steel –steel demand depends on a few key steel-using industries such as the construction and automotive sectors. To ensure recovery in these sectors, it is important to implement the EU growth-oriented initiatives, increase their sustainability, and improve their efficiency.

International level - non-EU steel producing countries often use trade restrictions to give advantages to their own steel industries. These restrictive measures include tariff barriers, non-tariff measures such as technical regulations or conformity assessment procedures, export incentives, and restrictions on steel making raw materials. The EU addresses trade barriers by implementing its market access strategy. It enforces international commitments and secures a level playing field for the EU steel sector.

Trade – trade is particularly important for steel. The Commission supports the liberalisation of international trade under the World Trade Organisation (WTO). At a bilateral level, negotiations of Free Trade Agreements (FTAs) are a key instrument to achieve a level playing field for EU companies.

Energy prices and supply - similarly to other Energy Intensive Industries (EII), energy costs are one of the main drivers of competitiveness for the EU steel sector. Energy costs represent up to 40% of the total operational costs of steelmaking. European industry is faced with higher energy prices than most of its international competitors, a trend which has been amplified by price development in recent years.